Stocks log 4-day losing streak as market awaits Fed signals

Stocks started the week with a thud Monday, with the Dow and S&P 500 logging their first four-day losing streaks this year, as investors looked ahead for clues on the Federal Reserve's plans on bond purchases and amid rising Treasury yields.

"All of last week, people were trying to make the story match the market move," said Art Hogan, managing director at Lazard Capital. "If the pullback last week was due to tapering worries, then I think we may have overdone it. I was more concerned about the actual negative news—weak guidance from Cisco and earnings misses from Macy's, Wal-Mart and Kohl's."

The Dow Jones Industrial Average declined 70 points to close just above the psychologically-important 15,000 level, dragged by JPMorgan and Alcoa. Last week, the index suffered its worst weekly decline of 2013, shedding 2.2 percent.

The S&P 500 and the Nasdaq also finished in the red. The Dow and S&P 500 are on track for their biggest monthly declines since May 2012.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped above 15.

Most key S&P sectors fell into negative territory, led by energy and financials.

"The movement in the market is a bit exaggerated when volume is light and that's going to be the case over the next couple of weeks," said Hogan. "We don't have much this week but we do have a real concentration of information on Wednesday and Thursday including the Fed's meeting minutes…until we get some news in terms of what tapering is going to look like, we may be sideways this week."

With no major economic data on tap Monday, trading was light as investors looked ahead to the minutes of the last Fed meeting, which will be released on Wednesday, for clues as to when the central bank will start scaling back its $85 billion per month stimulus program.

On the earnings front, Saks posted a winder-than-expected quarterly loss after weak sales of shoes and handbags caused the department store chain to mark down prices. Saks became the latest retailer to post lackluster sales. Last week, Macy's, Nordstrom, Kohl's and Wal-Martall posted lower-than-expected sales. In July, Saks reached a deal to be acquired by Canada's Hudson's Bay.

In the bond markets, yields on 10-year benchmark Treasurys briefly touched 2.90 percent, the highest since July 2011 amid Fed tapering concerns. So far this month, U.S. bond mutual funds and ETFs have seen outflows of $19.7 billion, according to TrimTabs.

"Heavy bond fund redemptions and the backup in bond yields should concern all investors, not just bond investors, because the U.S. economy is a highly leveraged economy that will not easily tolerate higher borrowing costs," TrimTabs CEO David Santschi said in a report.

Brent crude oil rose above $110 a barrel as the loss of Libyan oil exports tightened supply and as ongoing violent unrest in Egypt stoked fears for exports from other oil producers in the Middle East and North Africa.

Oil prices are likely to drift higher this week, CNBC's weekly sentiment survey showed. However, price gains may be limited, as analysts said the uptick in political instability in Egypt had already been priced in.

"There is still too much oil," said Thomas McMahon, director of the Pan Asia Clearing Enterprise and former chief executive officer of the Singapore Mercantile Exchange. "But cheap dollars, technical disconnect and Egypt seems to be sweeping this aside. Common sense and supply demand will prevail but maybe not this week."